AUDITING I

What is audit ?and Who can become an auditor ?Session 1

Learning ObjectivesUnderstanding why a company need to be audited.Understanding what stakeholders expect from auditorsUnderstanding the qualifications of an auditorUnderstanding the criteria used in an audit process

What is auditing ?Auditing as a systematic process of objectively obtaining and evaluating evidence regarding assertion about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users (The report of The Committee on Basic Auditing Concepts of the American Accounting Association - Accounting Review Vol. 47)

Contents of Definition of auditingA systematic process of objectively obtaining and evaluatingevidence regarding assertion about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users

Business Interrelationshipand why do we need audit ?Company(management)InvestorBankersBAPPEPAMBuyersGovernmentSuppliersOthers

What do they expect from auditor ?BankersInvestorsBappepamBuyers/customersSuppliersGovernmentOthers

The Relationship among Users, Auditors and Management of the companyCompanyCompanyAuditorPublicInvestorsBankersGovernmentSuppliersBuyersBappepamOthers

Understanding about AuditorCriteria used by auditorWhy do we need that criteria ?Psychology of auditorAuditor is a profession between the need of a companys management and of publicThe Qualification of an auditor

The Qualification of an AuditorSA Seksi 150 Standard Auditing stated:a.1. Auditing harus dilaksanakan oleh seorang atau lebih yang memiliki keahlian dan pelatihan teknis yang cukup sebagai auditor.a.2. Dalam semua hal yang berhubungan dengan perikatan, independensi dalam sikap mental harus dipertahankan oleh auditor.1.3. Dalam pelaksanaan audit dan penyusunan laporannya, auditor wajib menggunakan kemahiran profesionalnya dengan cermat dan seksama.

The Qualification of an AuditorSA Seksi 150 Standard Auditing stated:a.1. Audit should be done by a person or persons who have been sufficently trained in audit technics to make him or them become auditors.a.2. with all respects related to angagement, independent in mental attitude should be maintained by auditors.1.3. in implementing audit and preparing audit report, auditor must prudently implement his/her professional expertice.

Keahlian dan Pelatihan Teknis(Expertice and Technical Training)Auditor is respected as an expert whoknows more, understands moreexperiences moreis more capable

Need a specialized education and training

IndependentIndependent in appearanceIndependent in performance/fact

The Important Elements ofan Independence.Quality of personnel.Freedom to act.Interpersonal relationship.Financial interest.Profession solidarity.

Kemahiran professional(Professional expertise)Professional means acting honestlyproportionallyimpartiallybased on his/her expertise and factconsistentlypersistentlyin order to get the best result

So auditor is ?An expert that people can account on in doing audit on behalf of them, in order to ensure whether the financial statements being audited have been presented in accordance with certain criteria (generally accepted accounting principles)

People can be accounted onAdaptabilityUnderstandabilityDedicationIndependenceTrustworthinessObjectivenessResponsibility

(Qudrat Chalim)

Adaptability and UnderstandabilityAuditors should be ready to deal with;New working environmentNew problemNew people to deal withWorking under pressureChallenge in every step of audit process

DedicationAn auditor should put all his/her afford, (expertise knowledge, experience, and time) in doing his job.Nothing should be able to deviate him/her from audit objectives

IndependenceImpartialFree to act and to express an opinionIndependence in performance/factIndependence in appearance

TrustworthinessAuditors should be a person who has integrity, is reliable, is honestis loyalcan be accounted on,

ObjectivenessFree of conflict of interestNothing to hideNo engineeringAs it is

ResponsibilityDue professional careBased on evidence

CPA (Auditor) EngagementAttestation EngagementAudit on Financial Statements and other types of auditExamination on Prospective Financial StatementsOther Attestation Engagement

Non attestation EngagementManagement & Tax ConsultingAccounting and BookkeepingCompiling Financial StatementsOther Management Consulting

Types of AuditFinancial AuditGeneral AuditCompliance AuditPost AuditOther Financial Audit

Management AuditOperational AuditEfficiency and Economy AuditPerformance or Effectiveness AuditOther Management Audit

Audit Standards and CriteriaAudit Standards GAAS or SPAPAudit CriteriaGeneral Audit GAAP or PSAKOther Financial Audit Rules/ Regulations and Standards applied as the bases on doing the activitiesManagement Audit formulated by the auditor and auditee.

ReferencesSPAP SA 100 DAN SA 200Messier, Glover, & Prawitt: Auditing & Assurance Services: A Systematic Approach Part 1Boynton and Johnson: Modern Auditing

***